tv Nightly Business Report PBS March 22, 2014 1:00am-1:31am PDT
this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by -- thestreet.com. featuring stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus, the multimillion dollar portfolio she manages with jim cramer. learn more at thestreet.com/nbr. tough slog. stocks lose ground today but gain for the week. the s&p briefly hits a new all-time high. but a heavy news week made for ups and downs. double danger. treasury says a new tax scam is the biggest it's ever seen. and there's also growing concern identity theft is growing through your medical records. and small giants on market
monitor has small cap names he says are poised for big-time gains. all that and more on "nightly business report" for march 21st, 201 2014. >> good evening, everyone. wall street wrapped up an exhausting week with sharp declines and equally intense gains that sent stocks on a wild ride. it began on monday with a crucial vote in moscow to take control of crimea. once the threat of a military confrontation eased up, stocks surged. that rally continued on tuesday, but a day later federal reserve chair janet yellen hinted that interest rates might rise sooner than anyone expected and stocked plunged. investors bounced back on thursday on encouraging economic reports. and finally today, a qaudruple reaching day for options and futures pulled down stocks. but investors had the final say on the week, pushing the dow and s&p up more than 1%. and the s&p even hit a new record in interday trading. by the closing bem the dow lott
28 points, nasdaq down 42 and s&p slipped 5 points. the head of the minneapolis federal reserve says the central bank made a big mistake. she is blasting fed policy's decision not to cite a specific unemployment target in considering whether and when to raise its benchmark interest rate. he says the guidance is wrong and the nation's central bankers should have outlined a clear plan to keep record low interest rates right where they are until the nation's jobless rate falls below 5.5%. the current unemployment rate is 6.7%. mike holland joins us now. he's chairman of holland and company his own money management firm. mike, we've gone through a crazy week. worries about russia, worries about the economy, worries about interest rates. what's the next worry for investors, or have things calmed down a little bit and we have break here? >> the fed's behind us.
we've had some of the early warning signals from companies that weather hurt the first quarter and so on. when you recap the week it was very helpful. now i know why friday night i'm kind of tired. this was quite a week. yet at the end of the week, yet once again the s&p, the market was up a little over 1%. and that's been the story since for the last five years, since 2008-2009 we've had plenty of things to worry about. but stocks have become so cheap and people have thrown in the towel and many people the towel is still in the middle of the ring. they have no interest and stocks are still okay where we are now. but i think the next thing to worry about probably continues to be putin and what's going on over there. we have president obama over in europe right now trying to -- but i think that's probably where the market will focus for awhile. >> mike, i'm with you. stocks ended higher on the week but it sure didn't feel that way. it was tough getting there. if you were looking for value in
equities right now, what kind of companies would you be lasering in on? >> ty, actually sometimes it gets pretty easy. and right now if you look at the world, you look at where the u.s. is, the u.s. is probably best situated of all the markets. within the u.s. market we have some crazy things like tesla and twitter and things like that. but we have the big quality companies remaining, even though they're up over the last five years they still remain at valuation levels because they've increased the value of their earnings and cash flow and basic business with strong balance sheets. you have companies like intel microsoft johnson & johnson, exxon mobile jp morgan. they remain attractive on an absolute basis. relative to other things, for example treasuries in some part of the fixed income market some areas of real estate like london houses, u.s. stocks the big quality companies are easily the most attractive thing to me.
sometimes when it gets this easy you wonder what could be wrong with it. good news is there's numbers. >> you saw today fitch ratings lifteded its negative outlook on the u.s. economy. we've had some good reports on the u.s. economy this week. that is one of the reasons that you feel better about investing here rather than in nonu.s. holdings? >> absolutely, susie. you and i spoke earlier today about the interesting juxtaposition of the u.s. having its improved fitch outlook and russia being downgraded. these are simply facts. facts are stubborn things. the u.s. looks pretty good. we're probably getting right now this week a few indicators that the spring could be surprises to the up side with the economy. and one of the reasons you can have some comfort in that outlook is that bank lending over the last few weeks has a
>> once again, numbers are persist at the present time things. facts are persistent things. these things are priced ridiculously high. wonderful companies, ridiculous stock prices. then you look at some of the other companies, apple. you look at apple and twitter. you look at microsoft and you look at tesla. these are crazy prices for these things when you have really high quality of merchandise over here at really low prices. doesn't make any sense. >> we could go on and on about all of that. thanks mike for coming by. have a great weekend. mike holland of holland and company. another blow to pimco the
world's largest bond fund company already reeling from the sudden departure of chief executive mohamed el-erian when internal spats with cofounder bill gross became public last month pimco has been replaced as a sub adviser of a new billion dollar bond fund offered by columbia management investment advisers. and more trouble for general motors ceo mary barra. on the job for just two months barra will have to testify before congress on april 1st on what the automaker knew about a faulty ignition switch that's been linked to a dozen crash-related deaths and why the company waited more than a decade to recall 1 million affected vehicles. a court ruling about so-called swipe fees. the court uphell the federal d much banks can charge businesses
for credit card transactions. retailers insist the cap was too high. despite today's favorable ruling, it was a split decision for shares of visa and master card. those are the nation's biggest card issuers. an important warning to taxpayers from the irs and a sophisticated telephone fraud the agency is calling the biggest scam of its kind ever. callers claim to be with the irs are targeting tax filers, demanding immediate payment for overdue taxes. and a lot of people are falling for it. hampton pearson has more. >> reporter: with the april 15th tax deadline a little more than three weeks away, both the irs and the top treasury department troubleshooter are warning taxpayers about what they say is the largest ever telephone fraud scam. more than 20,000 taxpayers in nearly every state in the country have collectively paid over $1 million to telephone scammers and con artists in recent months. individual claiming to be irs
agents on the phone demanding debit card payments or a wire transfer. the scammers threaten their victims with arrests, deportation, or loss of their driver's license if they refuse to pay. the irs says its first contact with people about unpaid taxes is usually by mail, not the telephone. and no one from the irs asks for payment using a prepaid debit card, wire transfer and does not take credit card numbers over the phone. if you owe taxes or think you may owe federal taxes, hang up and call the irs at 800-829-1040. >> this is the second time in the last six months the irs has put out an alert about this particular telephone scam, which as we said has gone nation-wide. >> hampton, this is really surprising. it just astounds me that people are buying into this. what are the tricks that these scammers are using? they're obviously very
persuasive and convincing that it really is the irs that's calling. >> reporter: well, these telephone con artists are intimidating their potential victims by using fake irs badge numbers. sometimes, believe it or not, they even have gotten ahold of the last four digits of some of the victims' social security numbers and using caller i.d. phone numbers that look authentic. >> any red flags on these calls? >> reporter: one final reminder from thei irs they say their employees will never request personal or financial information by e-mail, text or any kind of social media. >> thanks a lot, hampton pearson. now to the latest type of identity breach you need to know about. medical i.d. theft, including cyber attacks on all your medical records and data from health care companies. it is a growing problem with 50 million reported data breaches each year.
sheila cdharmarajan has more. >> reporter: your social security number, address and credit card info are all in one place. according to a recent study, cyber criminal attacks on health care organizations like hospitals and clinics are up 100% in the past three years and are costing the indusy more than $5.5 billion a year. >> what we find in the marketplace is a financial identity can be worth 5 to $10 if you have all the information. a medical identity can be 5 to 10 times that amount just because how easy it is to monetize that information once the bad guys get it. >> reporter: last year, 40% of health care organizations reported a criminal data attack. for a total of an estimated 50 million breaches across the country. and health care professionals that participated in the survey expect that under the affordable care act, patient security risk will be increased as even more information is exchanged between the government and providers.
an alarming 88% of organizations report allowing their employees to use their personal smart phones and tablets to access confidential information, including your medical records. experts say the industry is unprepared for the increase in mobile access. >> health care is substantially behind the financial services industry in terms of protecting identities, and it's particularly concerning because these are the most vulnerable identities we're looking at. >> reporter: recognizing flaws in the system is the first step to preventing breaches say analysts. and as hospitals continue to ramp up security measures, they are reporting an increased confidence in their ability to detect future threats. in the meantime, the recently formed health information trust alliance, in conjunction with the u.s. department of health and human services, announced last week it will conduct monthly cyber threat briefings to help health care organizations prepare for and respond to security breaches.
den. >> john hardwood joins us from the white house with more on today's meetings. john, first of all who was there and what was on the agenda? what were they complaining about mostly? >> netflix and facebook, google and a series of others. look, their complaints are partly about privacy but they're partly about public relations. because remember, the tech companies as well as the administration were embarrassed by the nsa revelations. the administration because it made them look like big brother looking at everything's communications, and the tech companies because it made them look like the accessories to big brother. so in part they're trying to figure out ways in which the administration can do what it thinks necessary for national security without putting the tech companies in a bad position.
in particular let them explain to their customers exactly what they're doing and what the justification is for it. >> so what do we expect to come out of this meeting, john? >> reporter: not a whole lot specifically in terms of new announcements. but we're just a week away, tyler, from when the attorney general eric holder is supposed to present recommendations to the president for how this program might be changed. and the big change the president talked about was whether or not this metadata can be collected, not stored by the government so the government doesn't hold it, somebody else holds it but the government could have access to it on a timely basis when it decides it needs it for national security reasons. don't know how that is going to get worked out but those recommendations could come in a few days this. meeting was part of that proper says. >> a lot of serious issues here. is this going to be substantive changes of just surface conversations? >> reporter: i don't think it's going to be all that substantive, susie, for the simple reason that the administration believes this is necessary for national security.
i think a critical mass of the congress believes that as well. you've got to say that the crisis in ukraine, which is raising tensions, questions about a new cold war with russia, certainly helps the administration make the case that hey look we can't let down our guard. >> all right, thanks a lot, john. john harwood reporting from washington. garden restaurants reports a 18% decline in profits. that is where we begin tonight's market focus. the parent of red lobster and olive garden said those two chains continue to lag. still earnings matched analysts expectations. despite weakness the company reaffirmed its guidance for the year. garden reiterated plans to spin off red lobster despite push back from activists who want the company to put the move to a shareholder vote. shares rose more than 2.5% to $50.66. a sizeable settlement with swatch took a huge chunk out of tiffany's fourth quarter earnings. it missed estimates on both the top and bottom lines and its
guidance came in below street estimates. shares were off a fraction to $90.73. private equity firm golden gate capital revealed a more than 9% stake in ann incorporated, the parent company of ann taylor and ann taylor loft. that sent shares of the company way up in today's session. the firm is now the single largest shareholder in that women's apparel retailer. the stock up 13% to $42.05. >> blackberry reached a deal to sell most of its real estate in canada in an effort to turn around its business. the struggling smartphone maker gave few details about the sale. we'll find out more about how the company's doing when it reports earnings next week. today shares fell 2.5% to $9.18. media general will buy lin media for $1.6 billion. the deal will create the second largest local tv broadcast company in the country. shares of media general rose a fraction to $17.44. but lin skyrocketed more than 22% to $26.32.
>> our market monitor tonight says if you're looking for big gains in the stock market, think small. he's eric marshall, president of and portfolio manager of hodge ens capital management. it manages more than $2 billion. welcome. good to have you with us, eric. why do you like little guys? >> well, we think now is a good time to really focus on individual stock selection and less about really trying to make broad bets on the market or betting on indexes. within the small caps, you can really find secular growth opportunities. we expect merger and acquisition activity like the one that you just spoke about here a few minutes ago to continue out there, which should really help the valuations small companies. as larger companies look to grow their business, we think you'll see more and more acquisition activity such as that, which should also be good for the small cap stocks. >> eric, let's go down. you've got a couple of stocks to tell us about, small cap stocks.
first one on your list, eagle materials. symbol exp. why do you like it and what does it do? >> eagle materials is a leading producer of both cement and gypsum wall board. both of these businesses are in the early stages of a recovery. they're seeing pricing power. and as a result of that they should be able to leverage a lot of their fixed costs and see substantial earnings improvement over the next couple of years. we think at the peak of the current cycle they could get as high as 10 to $12 per share of earnings power, which if they're able to achieve we think the stock will be substantially higher here over the next couple years. >> your second pick is pharoah technology. it's a business equipment manufacturer. what do they do and why do you like it? >> yeah. this i almost like an industrial technology company. they make 3d measurement systems where they're using lasers and such to actually measure things
using three dimensional software. and this is used in manufacturing, it's also used in design and development to speed up time to market for products as well as reduced manufacturing costs. and as companies start spending on capital investment again, this is a company that should benefit from that. they have no debt, a nice cash position, and we see the company growing double digits here over the next couple of years. >> let's talk about another one of your recommendations, zep. tickerer symbol zep. it's trading at $17.85. why should investors put new money in this? >> this is a company you don't hear about every day. it's not very exciting. but they're a provider of industrial and commercial cleaning products. they make solutions and solvents and stuff like that that's actually consumed in a number of different commercial and industrial applications. and as the economy improves,
their business should continue to pick up. we like the valuation, and we like the prospects for the company to potentially increase dividends in the future. and they're really a company that's well underneath the radar that i think is worth taking a look at. and zep as well as the other two that i mentioned are both owned in the hodges mutual fund which i have personal ownership in. >> so there's your disclosure. but give me some idea very quickly, eric, of what kind of returns over the next year, three to five years you might expect from these companies. are we talk about home runs, good singles hitters? what? >> well, i think that this is a time to really focus on individual stock selection. and it really depends on what type of risk-reward you're willing to take. in the case of pharoah technologies, obviously that stock trades at a much higher
multiple and we would expect to see much faster growth and maybe a little bit slower growth in a company like zep where you're selling cleaning equipment. >> well, that sounds logical to me. eric marshall, thanks very much. eric is with hodges capital management. and coming up, how one brewer is dealing with the ongoing drought in the west and making every drop of water count. twitter is celebrating its birthday. eight years ago today it sent out its first ever tweet. but there's no celebrating in turkey. that's where officials try to ban access to twitter after tweets were sent out accusing prime minister of using court
orders to suppress corruption allegations against him. but that censorship attempt failed as tech savvy turks have been able to circumvent attempts to block the service. the long-lasting west coat drought is impacting the availability and quality of a key ingredient in brewing. barley. now the industry is making changes to make sure there's enough barley and suds to go around. sarah eisen has more. >> reporter: jamie hart is a barley farmer in the san lewis valley of colorado. a valley which gets 85% of its water from snow melts to the rio grande river. >> water is what we live on. it's our lifeblood for our industry. >> reporter: but there's a problem in the valley. snowfall in surrounding mountains has been below average for the last six years. >> it's been getting worse as we go through time here, and we're sure hoping to see the weather change. >> reporter: that's something
barley growers and beer giants like millercoors can't count on especially with barley crop on the line, one of the key ingredients in beer. >> coors is really famous for saying that barley is to beer as grapes is to the wine. >> reporter: kim marada is director of sustainability for millercoors. one of her key jobs, finding ways to reduce the company's water footprint. it reduced the water it uses to 3.9 barrel of water for one barrel of beer less than the industry average. on the farm they know they've got a lot more work to do. >> we learned more than 90% of the water is really within our agricultural supply chain. so we can be as efficient as possible in our brewerys but if we're not working with our growers and supply chain to become efficient we're not going to create scale or impact. >> reporter: millercoors has 850 partner growers in four states including here in colorado. for nearly 100 growers met this week at the company's winter growers meeting to discuss the
growing concern over the water shortage. so what is millercoors doing? in addition to the water they have saved at brewerys around the country they've hired agronomists to work with farmer the. they've used new irrigation techniqu techniques, breeding new forms of barley drought resistant. >> we were able to save over 400 million gallons of water in three years. >> reporter: partner farms have taken initiative as well. >> the old ones are just not as efficient. >> reporter: jamie hart replaced all the nozzles on his farm's pivot equipment at a cost of about 4,000 per pivot, a cost he believes is worth it in the long run. >> it comes with the cost. but this water is very precious. >> reporter: so far, no costs have been passed along to the consumer. but it's certainly something wall street may soon be keeping an eye on. for "nightly business report," i'm sara eisen. >> for more on the new
technology and systems being used to make sure your beer mug stays full go to our web site, nbr.com. and that's "nightly business report" for tonight. i'm susie gharib. thanks so much for watching. >> and i'm tyler mathisen. thanks from me as well. have a great weekend, everybody. we'll see you back here on monday. "nightly business report" has been brought to you in part by -- >> thestreet.com. founded by jim cramer, thestreet.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at thestreet.com/nbr.
gwen: could developments in ukraine turn u.s. foreign policy upside down? and how the midterm elections could do the same thing to domestic policy. tonight on "washington week." >> russia has offered a variety of arguments to justify what is nothing more than land grab. >> the united states reacts russia's military intervention and land grab in crimea. >> russia needs europe more than europe needs russia. gwen: the west gambles tougher sanctions can force russia back from the brink. >> the ukrainians shouldn't have to choose between the west and russia. gwen: wut could russia's annexation of crimea enflame other tensions around the world? on the domestic front, the midterm elections fight begins to take shape. >> my belief is that it's going to be a very big wi